Oil prices surged around 5% to a two-week high on Thursday after the United States imposed sanctions on major Russian oil producers Rosneft and Lukoil, raising fears of tighter global supply. Brent crude futures rose $3.40, or 5.4%, to settle at $65.99 a barrel, while U.S. West Texas Intermediate (WTI) crude climbed $3.29 or 5.6%, to $61.79 a barrel. Both benchmarks marked their biggest daily percentage gains since mid-June and their highest closes since October 8.
The sanctions could curb global oil flows, as Russia was the world’s second-largest crude producer in 2024 after the United States.
“The announcement of sanctions by the U.S. on Rosneft and Lukoil is a major escalation in the targeting of Russia’s energy sector and could be a big enough shock to flip the global oil market into a deficit next year,” said David Oxley, chief commodities economist at Capital Economics.
U.S. diesel futures also jumped nearly 7%, boosting refining margins to their highest since February.
The move forces refiners in China and India — major buyers of Russian oil — to seek alternative supplies to avoid sanctions risk. Chinese state oil firms have already suspended seaborne purchases from the affected companies, while Indian refiners, led by Reliance Industries, are preparing to sharply cut imports of Russian crude to comply with the sanctions.
Kuwait’s oil minister said OPEC stands ready to offset any supply shortfall by adjusting production levels, though analysts warned that replacing Russian barrels would take time.
“The various U.S. and EU sanctions thus far have had essentially no effect on Russia’s ability to export oil, but this latest round could prove more disruptive if secondary buyers pull back,” said Pavel Molchanov, analyst at Raymond James.
Britain and the European Union also expanded sanctions targeting Russia’s energy sector, including restrictions on two Chinese refiners and trading arms linked to PetroChina.
Analysts said the combination of sanctions, disrupted Russian output, and reduced Indian imports could shift the oil market from surplus to deficit in early 2026, supporting prices in the weeks ahead.